SL. No.

: To Be Assigned by ISCEA

2015 ISCEA Ptak Prize

Global Case Competition

Team:

MXUB-0104-15

Team Member -1

Team Member - 2

Name : Arafat Amin Anik

Name : Najiba Nuren Khan

Signature :

Signature :

Team Member - 3

Team Member - 4

Name : Syed Ibrahim Saajid

Name : Tasnuva Amin Nova

Signature :

Signature :

Last Date of Submission: May 15, 2015

Contents
Bangladesh Apparel Industry ........................................................................................................................ 2
RMG Value Chain .......................................................................................................................................... 3
Areas of improvement in the apparel sector ................................................................................................ 4
Talent gap ................................................................................................................................................. 4
Trade incompetence ................................................................................................................................. 5
Poor transportation facilities .................................................................................................................... 5
Inefficient Order Management ................................................................................................................. 5
The way forward ........................................................................................................................................... 6
Addressing the talent gap ......................................................................................................................... 6
Using RFID solution ................................................................................................................................... 6
Addressing the Transportation Challenge ................................................................................................ 7
Achieving Information Symmetry through IT ........................................................................................... 8
Appendix ....................................................................................................................................................... 9
Estimated Financial Summary ................................................................................................................... 9

Bangladesh Apparel Industry

With the establishment of RMG industries since the early 1980s, Bangladesh has altered its global image
from being seen as a bottomless basket to a basket full of opportunities. It was in 1978, when local
Bangladeshis were first trained by South Korean firm Daewoo to make ready-made garments for export
purposes. Today, this sector constitutes 81% of the countrys exports and provides employment to more
than 4.8 million people, mostly women.
Till today, cheap manual labor remains Bangladeshs biggest competitive strength in attracting foreign
buyers. The fruit of their labor created an industry worth $25 billion. The RMG sector is not just a
flourishing sector of its own, but also the largest contributor of the countrys positive economic growth.
By 2021, the 50th anniversary of
Bangladesh since independence, the
apparel industry is expected to be worth
$50 billion. To reach that goal, however,
persisting problems should be taken care
of. Despite its promising growth history,
the RMG sector is rife with problems.
It has been forecasted that to achieve
the desired $50 billion within the next six
years, countrys exports need to grow at
an annual rate of 10.9%. However, given
the persisting political unrest and poor
infrastructure, growth prospects of the
sector remain debatable. Nevertheless,
for the sector to double its worth in the next six years, the apparel industry has to gain market share
from competitors such as India, Vietnam, Cambodia and China.

RMG Value Chain

Bangladesh entered into the chain at the Assembly/CMT (Cut-Make-Trim) stage and that was the
majority of factories from the 1980s 1990s. The lure of competitive prices, low labor costs, good
quality, relatively larger capacities (Bangladesh has 5,000 factories, Indonesia 2,450, Vietnam 2000,
Cambodia 260) and supplier capabilities are the driving factors behind this growth. The industry
flourished under the Multi Fiber Agreement framework. The tariff and quota-free access to the EU
market under the GSP scheme since the early 80s were additional advantages. Today firms have shifted
from CMT to OEM (Original Equipment Manufacturer) production, offering almost full package solutions
to buyers, from downstream logistics to shipping the final product to the buyer. This transition has
happened over the course of around 30 years. Now the challenge for the industry is to reach the next
level in the value chain by reaching ODM (Own Design Manufacturer) stage. This means that
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Bangladeshi companies will design apparels based on their own expertise with local designing resources.
Then Bangladeshi merchandizers will approach foreign buyers with these designs. This incremental
value creation in the process will help Bangladeshi industries to gain more share of the total revenue
from the process. Our target is to reach this level by 2021. Once Bangladesh gets to that level of internal

competence building, global acceptance for Bangladeshi designs will increase and finally Bangladeshi
companies can reach at the top of the value chain by becoming OBM (Own Brand Manufacturer)
companies.

Areas of improvement in the apparel sector

Despite being the second largest producer of RMG in the world, this multibillion dollar industry is yet to
realize its full potential. There are several issues at hand which need to be addressed if the apparel
industry aims to take the next, big step within the coming five years.

Talent gap: To meet demands of the RMG sector in the near future, cheap labor will no
longer be the only factor in attracting buyers. Operational efficiency needs to be enhanced to
remain competitive. Lack of talent is a major barrier in achieving desired efficiency in this
industry. Till now, the sector has heavily relied on foreign talent in mid management. If we want
to become a leader in the sector among neighboring competitors, we need to build internal
competence through local highly skilled mid-level executives.

A key factor in the failure to attract talented graduates to careers in RMG sector is its negative
public image. Working in RMG sector is often associated with low pay, no respect, no career
development, dangerous and poor work life balance. Hence, most talented graduates tend to be
attracted to top multinationals operating in the country.
Furthermore, the technical talent in Bangladesh needs substantial training in global
manufacturing best practices to come out of the image of "sweat shops" in the eyes of
international media. To develop efficient middle management, qualities like better English
speaking abilities, leadership skills, communication and presentation skills, dependability,
teamwork and managerial skills among executives are necessary.

Trade incompetence: Bangladesh has been ranked 108 out of 160 countries in the
Logistics Performance Index (LPI) according to a 2014 World Bank report. Poor transport
infrastructure, customs performance and timeliness of shipments have been identified as the
key areas of concern regarding trading in goods in the country. RMG sector being the largest
exporter of the economy suffers heavily for such incompetence. Logistical problems within the
RMG sector are rife with customs bureaucracy, inefficient tracking and tracing of orders and
warehouse mismanagement. Inefficient order tracking process increases production lead times.

Poor transportation Facilities: One of the biggest challenges of the RMG sector is
transportation of finished goods from Dhaka to the Chittagong port. Chittagong port is the only
functional sea port and export hub for all industries. There are a lot of challenges in this whole
process. This includes, but not limited to:

Container backlog in Chittagong port

Political unrest creating road hazard for transportation to and from factories to
Chittagong
Long traffic jams in the highway causing delay for delivery

Inefficient Order Management: The process of following up with buyers and suppliers
is long and arduous, which often leads to high lead times and shipment inefficiencies in the
absence of proper communication. The process of fetching right suppliers for the right job is also
quite time consuming. To meet ad-hoc work orders from foreign buyers, subcontracting to small
companies remains a necessary practice for large companies. This makes the issue of order
management more complex and multi-layered.

The way forward

Addressing the Talent gap: Building a local pool of talented managers in mid-level
management will lead to overall organizational efficiency within the apparel sector, which is
missing at present. Improving the talent landscape of RMG sector will impact the pricing driver
as well as information driver directly and all other drivers of supply chain indirectly. To attract
local talent in the RMG sector, following steps should be taken:
Collaboration with Academia: RMG sector needs to collaborate with academia to ensure
supply of talented human resources. This can happen by partnering with top private and
public business schools to offer major courses on merchandizing, supply chain
management, apparel designing etc. Offering summer internship programs and inviting
university students for plant tours can also be used as a strategy.
Revaluation of Remuneration Packages: RMG sector competes with multinational
FMCGs and telecom companies for local talent. Keeping this in mind, salary structure
and other benefits should be improved through proper Compa-ratio analysis across
industries. This will lead to higher retention of quality resources as well as attracting
fresh talents.
Employer branding: RMG sector needs to build a positive image of itself as an employer.
Using social media and web platforms as a communication tool can be a solution here as
it will be easy to reach the target audience through this. Among values to be promoted
as an employer, use of IT at workplace, work-life balance, flexible work hours, access to
mentors across the company and long-term career development within an organization
are factors that motivate talent in any sector. Recruiting brand ambassadors who will
communicate the real life experience of working at RMG sector can bridge gap between
expectation and reality of working in such organizations.

Using RFID Solution:

IT based solutions are a
must for all production
oriented industries. One
such technology suitable
for RMG sector can be
RFID. RFID (radio-frequency
identification technology)
uses electronic system
instead of barcodes for
tracking
inventory.
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Electronic tags are attached to each item, and it uses communication through radio waves to
transfer data between the tags and a reader. This solution positively impacts the supply chain
drivers of inventory, sourcing, transportation, and facilities.
This technology helps to identify, track and monitor the movement of every object being
made in the factory, distributed and sold, which results in improved visibility throughout
the supply chain.
RFID technology is not merely an alternative for barcodes; it confirms that the correct
products or materials are available in the right locations without any inconsistencies and
faults. In addition to accuracy, it makes the entire chain more efficient and reliable.
The application of RFID will also ease production processes because of its ability to
provide not only production data, but also information about workers attendance,
machine break down, product quality and location of the product.
The warehouse processes can also be improved by using RFID. The use of RFID assist
largely in tracking and managing the flow of items in real-time and accurately, as it
effortlessly traces the movement of the goods, and the information is spontaneously
passed along the system, which also enables the management to make strategic plans
for placing the products in the storage.
Shipping units are also equipped with RFID tags, which allows the management to
identify which item is in which container at all times, increasing efficiency and accuracy
in container management and tracking. RFID tags can be traced from a distance and
without being in the line-of-sight of a reader, which also allows several tags to be read
at the same time.
The distribution process is also made more efficient with the use of RFID. The
information provided by the electronic tags, can be utilized to sort the items, and send
them to the retailers in less time, with less effort and more accuracy.
Therefore, RFID technology, for its several benefits which includes better availability of goods,
better inventory control, and better transparency throughout the supply chain, can be
considered to be a progressive logistics operations solution for the apparel industry.

Addressing the Transportation Challenge: More than 1millionTwenty-Foot

Equivalent Units (TEUs) of containers are handled at the Chittagong Port annually. Of the total
number of containers released from the Chittagong Port, 70% travel to Dhaka and Narayanganj
areas. Only 10% of these containers come by trains, while the rest are transported through road,
which is more expensive and prone to creating traffic congestions.
In order to solve the transportation issue, one pragmatic solution will be to use the
Pangaon Inland Container Terminal in South Keraniganj. Bangladesh Inland Water
Transport Authority (BIWTA) and the Chittagong Port Authority (CPA) jointly built the
terminal in Pangaon at a cost of Tk1.54bn. Around Tk21,000-22,000 is needed to carry a
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container from Chittagong to Dhaka by road, while the cost goes down to around
Tk8,500 per container if it is the waterways. This will help ease the pressure of cargo
movement on the Dhaka-Chittagong railway and highway corridors.
The terminal has a storage capacity of 3,500 20-foot equivalent units (TEUs) of
containers and handle 116,000 TEU containers annually. Now the capacity needs to be
raised to 500,000TEU. Three vessels Pangaon Express, Pangaon Success and Pangaon
Vision have already been procured from China at the cost of Tk500m to operate the
terminal. Each vessel can carry 128 containers (20ft equivalent units or TEUs). Right
now, thereis a requirement of 40 vessels for the purpose of carrying goods through the
terminal; which can be all built locally.

Achieving Information Symmetry through IT: Using IT can help RMG sector to
efficiently manage the order generation and management process through leveraging the
information driver of supply chain. Right now, there is no unified web platform of all
Bangladeshi manufacturers for the buyers to find. If there were such a platform where buyers
can visit and see all the required information visually as well as numerically, it will help a long
way in influencing them. RMG companies can have their plant specifications and pictures,
design samples, list of clients and all other required information showcased here. Buyers can
also place their requirements and demands here which will help all the manufacturers to
understand their actual need. This web platform will bridge the gap between buyers and sellers
and help manage the demand and supply side more efficiently and effectively.

Appendix
Estimated Financial Summary:
Activity

Amount (in BDT)

Development of Pangaon Container Terminal

500 million

Integrated Web Platform Development

15 million

RFID Infrastructure Development

200 million

University collaboration for popularizing RMG as a job sector

50 million

Employer branding through social media

5 million

Total

770 million (USD 10 million approx.)